Bloomberg

Bloomberg | Quint is a multiplatform, Indian business and financial news company. We combine Bloomberg’s global leadership in business and financial news and data, with Quintillion Media’s deep expertise in the Indian market and digital news delivery, to provide high quality business news, insights and trends for India’s sophisticated audiences.

Lessons For Mutual Fund Investors From 2018

As the year ends, BloombergQuint compiles the best of its weekly series The Mutual Fund Show in 2018, highlighting key lessons for investors.

Key Takeaways Of 2018:

1) Don’t Forget To Top Up

How does one boost the retirement corpus by a few lakhs, or even crores? Easy. Put to work your annual salary increment, said Swarup Mohanty, chief executive officer of Mirae Asset Global Investments (India).

The probability of one losing money in the equity markets over one year can be as high as 30 percent, says Sunil Subramaniam, chief executive officer of Sundaram Mutual Fund. While this may not come as music to investors, he offers a solution: staying invested over a longer period.

If two mutual funds have returned 15 percent gains over the same period, are they equally good? No, says Rohan Chinchwadkar, assistant professor of finance at Indian Institute of Management, Tiruchirappalli, suggesting that risk evaluation can separate the wheat from the chaff.

The market regulator may have ordered reclassification of fund schemes, but that shouldn’t worry the average investor if one is mindful of the “three key buckets”, according to Dhirendra Kumar, chief executive officer of Value Research. An emergency fund is one of them.

Investors scrutinise a mutual fund’s track record so that they don’t invest in an underperformer. The performance of such schemes should be determined based on long-term track record, said Tarun Birani, founder of Thinkingman.co.in.

An investor can create a corpus of about Rs 1 crore by investing a small sum monthly in mutual funds for nearly 25 years. The target can be scaled faster if the monthly sum is increased. Regardless, there’s one secret sauce: and that’s to stay invested, according to Kunal Bajaj, founder and chief executive officer at Clearfunds.

There are two kinds of investors that don’t need the help of a financial advisor, according to Nimesh Shah, the managing director and chief executive officer of ICICI Prudential AMC. “They are those that know and those that don’t.”

It’s those who think that they know the markets need the help of an advisor, he said, while prescribing six precautions that investors need to follow.